Maruti Suzuki May Struggle to Hit Sales Target as Profits Slide

Maruti Suzuki, which sells one in every two cars in India, reported a 1.5 percent drop in sales in the July-September quarter to 484,848 vehicles.

Maruti Suzuki logo. (Photo: Reuters)

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Maruti Suzuki India may find it tough to meet its 10 percent sales growth target for the current fiscal year, its chairman said, after the carmaker reported a fall in quarterly profit for the first time in more than four years. India is the world's fastest-growing major car market but high global oil prices, rising interest rates and a weaker rupee has dented sales growth. Rising car insurance costs could also hit sales.

Maruti, which sells one in every two cars in India, reported a 1.5 percent drop in sales in the July-September quarter to 484,848 vehicles.

"We will continue to make best efforts to achieve the target this year ... but it will not be an easy task," Chairman R.C. Bhargava told reporters in New Delhi. Bhargava said sales for India's festive season, which started this month, are yet to pick up.

"The festival season does not seem to be showing any kind of great buoyancy over last year ... sales may be only marginally different from last year," he said, adding that the carmaker has increased discounts to push sales.

Big-ticket spending tends to rise ahead of major Indian festivals like Diwali that typically falls in the month of October or November.

Net profit fell to 22.40 billion rupees ($305.76 million) in the quarter ended Sept 30 from 24.84 billion rupees last year. Analysts on average had forecast a profit of 20.28 billion rupees, according to Refinitiv estimates.

A weaker rupee shaved 120 basis points off Maruti's margins for the first half of the current fiscal year, its chief executive officer, Ajay Seth, told reporters.

Maruti provides the bulk of Suzuki's revenue, and has a market value more than that of its parent at around $28 billion. Shares of Maruti ended 0.7 percent lower versus a 1 percent fall in the broader market.